The technology sector has dominated the market narrative for much of the last decade. However, 2026 is experiencing a shift. The tech sector is getting slumped, driven by valuation pressures, profit taking, and macroeconomic uncertainty.
Meanwhile, the energy, industrials, and materials sectors have emerged as some of the best sectors outperforming tech in 2026, benefiting from rising commodity prices, infrastructure spending, ongoing wars, and a broadening global economic cycle. The Technology Select Sector SPDR ETF (XLK) is down 2.43% year-to-date (YTD), while the energy, industrials, and materials sectors have outperformed by a wide margin.
Let's examine the ways investors might choose to allocate $10k to the best-performing sectors of 2026.
1. Energy — Top Performer in 2026 So Far
In early 2026, the energy sector has been the best-performing group in the S&P 500 Index ($SPX), significantly outpacing the tech sector, thanks to rising oil prices, geopolitical escalations, and rotations into commodity-linked assets. Energy stocks, as tracked by the Energy Select Sector SPDR ETF (XLE), have gained 25.37% YTD.
Top energy stocks to buy now include the following.
ExxonMobil Corp.
Valued at $632.6 billion, Exxon Mobil (XOM) remains one of the most profitable energy companies in the world. The company benefits from integrated operations spanning upstream exploration, refining, and petrochemicals. Exxon continues to reward shareholders with dividends and share buybacks, thanks to robust free cash flow and cautious spending. It yields 2.7% and is a Dividend Aristocrat, with a 42-year track record of dividend growth. Rising crude prices and new production projects have strengthened its long-term outlook.
Overall, analysts rate XOM stock a “Moderate Buy." Exxon stock has soared 24.44% so far this year and has surpassed its average target price of $143.89. But its highest target price of $183 suggests potential 22% upside over the next 12 months.
Chevron Corp.
Valued at $376.7 billion, Chevron (CVX) is a vertically integrated oil and gas company. It has also delivered strong operational performance, supported by high-margin production assets and expanding LNG exposure. With a cash balance of $6.3 billion and a debt-to-equity ratio of 0.21, the company’s balance sheet remains one of the strongest in the industry. That has allowed it to maintain consistent dividend growth for 37 consecutive years while investing in new energy opportunities.
On Wall Street, Chevron is rated a “Moderate Buy.” CVX stock has climbed 22% so far this year and is trading just above its average target price. Its high price target of $212 points to a possible gain of 13.9%.
2. Industrials — Riding Economic Broadening & Infrastructure Demand
The industrial sector has seen solid gains in 2026. As economic growth broadens beyond digital services and software, companies involved in manufacturing, construction equipment, transportation, and defense production are seeing rising demand. The Industrials Select Sector SPDR ETF (XLI), which gives broad industrial exposure, is up 13.57% so far this year, outperforming both tech and the overall market.
Let's look at the top industrial stocks to buy now.
Caterpillar
Valued at $336 billion, Caterpillar (CAT) is one of the world’s largest manufacturers of construction and mining equipment. The company’s machines are widely used in infrastructure projects, mining operations, and large-scale construction developments. As governments increase spending on roads, energy infrastructure, and urban development, Caterpillar stands to benefit from rising equipment demand. With strong equipment sales and a $51 billion backlog, Caterpillar generates robust cash flow and has maintained 31 consecutive years of dividend growth.
On Wall Street, Caterpillar stock is rated a “Moderate Buy.” CAT stock has climbed 75% over the past six months and 28.41% YTD, surpassing its average target price. But its high price target of $878 points to an upside of 20%.
Deere & Company
Valued at $167.3 billion and best known for its agricultural machinery, Deere (DE) has also been experiencing strong demand as farming modernization accelerates globally. The company has invested heavily in automation, precision agriculture, and data-driven farming technologies, positioning it at the intersection of agriculture and industrial innovation. Deere is also a dividend stock, offering a forward yield of 1.03%.
On Wall Street, Deere stock is rated a “Moderate Buy.” DE stock has climbed 32.24% so far this year but is trading 6.2% lower than its average target price of $653.30. Plus, its high price target of $793 points to a possible gain of 28.8%.
3. Materials — Benefitting From Commodity Demand & Infrastructure
The materials sector is another area where investors are seeing strong momentum this year. Companies involved in mining, metals, chemicals, and construction materials are benefiting from rising commodity prices and growing demand tied to industrial expansion. The Materials Select Sector SPDR ETF (XLB) provides broad exposure to major materials companies within the S&P 500. It is up 14.9% so far this year, outperforming tech.
Two materials stocks outperforming tech stocks include the following.
Newmont Corp
Valued at $128.9 billion, Newmont (NEM) is the world’s largest gold mining company. Gold prices often climb during times of economic uncertainty, war, or inflation, making gold miners appealing defensive investments. In 2025, robust gold sales enabled the company to generate large free cash flow to return to shareholders. And, Newmont pays a dividend based on gold prices, allowing investors to profit directly from growing bullion markets.
On Wall Street, Newmont is rated a “Strong Buy.” NEM stock has climbed 19.78% YTD but is trading 14.52% lower than its average target price of $136.56. Plus, its high price target of $177 implies a possible gain of 48.43%.
Rio Tinto
Valued at $119.56 billion, Rio Tinto (RIO) ranks among the world’s leading diversified mining companies, producing key resources such as iron ore, copper, aluminum, and other industrial metals. Demand for these commodities remains strong, supported by infrastructure spending, electrification trends, and the growth of renewable energy. Copper, in particular, is vital for electric vehicles and modern power grid systems. Strong production growth in copper, bauxite, and iron ore drove a 7% growth in revenue in 2025 to $57.6 billion. RIO also offers an appealing high dividend yield of 5.3%, higher than the materials sector average.
On Wall Street, RIO is rated a “Moderate Buy.” RIO stock has climbed 20.84% so far this year and is trading beyond its average target price 0f $91.83. Its high price target of $122 points to a possible gain of 26.7%.
The Key Takeaway
Over the last few years, mega-cap tech giants, particularly the “Magnificent Seven," have powered the rally in the S&P 500, delivering extraordinary returns and attracting the bulk of investor capital. However, the market rarely stays favorable to just one sector. And 2026 is shaping up to be a year where energy, industrials, and materials stocks outperform tech. Rising commodity prices, infrastructure investment, ongoing wars, and global economic expansion are all creating favorable conditions for companies in these sectors.
If you had $10,000 to invest today, a simple diversified approach could be allocating 40% to energy, 35% to industrials, and 25% to materials. Nevertheless, the exact allocation may differ based on individual risk appetite, time horizon, and investment strategy.
On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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